AI Structured Summary
Not yet generated for this judgment
Judgment
The above captioned bunch of appeals by the assessee and
Revenue and Cross Objection by the assessee for A.Y 2010-11 are
preferred against the separate orders of the ld. CIT(A) – 3, Gurgaon
dated 30.03.2019 pertaining to Assessment Years, 2010-11, 2011-12 and
2012-13 respectively,
Since the underlying appeals and cross objections were heard
together and the facts in issues are identical, all these appeals and cross
objections are being disposed off by this common order for the sake of
convenience and brevity, though the quantum may differ. It is pertinent
to mention here that most of the grounds in all the appeals and cross
objections pertain to similar issue. Grounds for A.Y are reproduced for
ready reference.
A.Y 2010-11
ITA No. 5034/DEL/2019
CO No. 111/DEL/2017
The Revenue has taken the following grounds of appeal:
“i)Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs.4,81,28,745/-made by the AO on account of bogus expenses placing reliance on the documents furnished by the assessee which failed to prove that the expenditure was incurred wholly and exclusively for the purpose of business.
ii) Whether on the facts and circumstances of the case, the Ld. CIT(A) has failed to appreciate that the onus to prove that the expenses of Rs. 4,81,28,745/- have been incurred for the services rendered by two proprietary concerns M/s Palwal Craft and M/s Palwal Enterprises is on the assessee company.
iii) Whether on the facts and circumstances of the case, the Ld. CIT(A) failed to appreciate that at the time of search no evidence was found to prove that the expenses incurred in respect of fabrication job alleged to be undertaken by M/s Palwal Craft and M/s Palwal Enterprises are genuine.
iv) The appellant craves to add, amend, alter or modify any grounds of appeal at the time of hearing.
The assessee has taken the following grounds of appeal in its cross objections:
“1.That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in assuming jurisdiction to assess the present year u/s 153A, more so when there was no incriminating material found relating to year under appeal.
2.That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in holding that impugned addition could be made even though no incriminating material was found during search.
3.That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in passing the impugned assessment order, more so there was no valid approval u/s 153D.
4.That in any view of the matter and in any case, the assessment order passed u/s 153A/143(3) is bad in law and against the facts and circumstances of the case.
5.That the cross objector craves the leave to add, amend, modify, delete any of the ground(s) of cross objection before or at the time of hearing.”
The sole issue in the Revenue’s appeal is with regard to addition of Rs. 4,81,28,475/- made by the Assessing Officer on account of payment made to Palwal Craft, Prop Mr. Harminder and M/s Palwal Enterprises, Prop. Mrs. Hema Sharma being bogus parties. At the very outset, the ld. counsel for the assessee vehemently submitted that the issue of addition of Rs. 4,81,28,475/- made by the Assessing Officer on account of bogus expenses, has been decided by the co-ordinate bench of the Tribunal in assessee’s own case in favour of the assessee and against the Revenue in A.Y 2013-14 wherein it has been held that Palwal Clothing and Palwal Craft, Prop Mr. Harminder and M/s Palwal Enterprises, Prop. Mrs. Hema Sharma are genuine parties.
Per contra, the ld. DR fairly conceded to the submissions of the ld. counsel for the assessee and relied on the orders of the authorities below.
We have heard the rival submissions and have perused the relevant material on record. The aforesaid parties Palwal Clothing and Palwal Craft, Prop Mr. Harminder and M/s Palwal Enterprises, Prop. Mrs. Hema Sharma were considered as genuine parties by the co-ordinate bench in ITA 3310/Del/2019 in A.Y 2013-14 vide order dated 24.09.2021. In the instant year, the assessee has assigned job work to the same parties Palwal Clothing and Palwal Craft, Prop Mr. Harminder and M/s Palwal Enterprises, Prop. Mrs. Hema Sharma. The CIT(A) deleted the said disallowance holding that the said parties did undertake genuine job work and the expense is genuine expense. We further find that the ITAT vide its order dated 09.05.2025 in ITA 7835-7836-7837/D/2019 for AY 2010-11, 2011-12 and 2012-13 in the individual cases of Smt. Hema Sharma (Prop. M/s Palwal Enterprises, and M/s Aambee Clothing) and Sh. Harinder Sharma (Prop. M/s Palwal Craft, and M/s Palwal Clothing) for AYs 2010-11, 2011-12 and 2012-13, has deleted the addition made in their hands and considered them as genuine parties. We therefore find that expenses, related to the above parties, claimed by the assessee, cannot be treated as bogus expense. The said issue for A.Y 2010-11 is therefore, covered by the decision of the co-ordinate bench in A.Y 2013-14. Respectfully following the same, we dismiss the grounds of the Revenue on this count.
In view of our finding given in the Revenue’s appeal, the cross objection filed by the assessee becomes infructuous and dismissed as such.
As a result, the appeal of the Revenue and cross objection of the assessee for A.Y 2010-11 stand dismissed.
A.Y 2011-12
ITA No. 3308/DEL/2019 [Assessee’s appeal]
ITA No. 5035/DEL/2019 [Revenue’s appeal]
In the assessee’s appeal the assessee has raised as many as 8 grounds of appeal. However, the main is grievance is the addition of Rs. 2,90,78,602/- made by the Assessing Officer and confirmed by the ld. CIT(A), on account of bogus expenses claimed with respect to M/s Sai Export, Prop. Shri Mohinder Kumar Garg.
At the very outset, the ld. counsel for the assessee submitted that the job work done by M/s Sai Exports, Prop. Shri Mohinder Kumar Garg were held by the ITAT as genuine in assessee’s own case in A.Ys 2013-14 and 2014-15 vide its order in ITA 3310/D/2019 dated 24.09.2021 and the addition made by the Assessing Officer was deleted.
Per contra, the ld. DR fairly conceded to the submissions made by the ld. counsel for the assessee.
Having heard the rival submissions and having perused the relevant material on record, we find that the ITAT (supra) has held M/s Sai Export, Prop. Shri Mohinder Kumar Garg as genuine parties. Respectfully following the findings of the co-ordinate bench [supra], we hold that the expense towards M/s Sai Export, Prop. Shri Mohinder Kumar Garg were genuine. Accordingly ground 3 and 4 raised by the assessee on this count is allowed.
The other legal grounds raised by the assessee in terms of section 153A and requisite approval u/s 153D, has not been pressed by the ld. counsel for the assessee. Accordingly, the same is dismissed as not pressed.
In the result, appeal of the assessee is partly allowed.
Ground Nos 1 to 3 raised by the Revenue in its appeal, relate to the addition of Rs. 8,29,29,997/- made by the Assessing Officer on account of bogus expenses made to Palwal Clothing and Palwal Craft, Prop Mr. Harminder Sharma which were deleted by the ld. CIT(A).
At the very outset, the ld AR submitted that the ITAT has decided the issue in assessee’s favour which the ld DR did not contest. After hearing the rival submissions, we find that this issue has been discussed and dealt by us while disposing the Revenue’s appeal in A.Y 2010-11. The co-ordinate bench in ITA 3310/Del/2019 in A.Y 2013-14 vide order dated 24.09.2021 and in the individual case of Mr. Harminder Sharma, in ITA 7838-7839-7840/D/2019 vide order dated 09.05.2025 have held that Palwal Clothing and Palwal Craft, Prop Mr. Harminder were genuine party. Respectfully following the same, we dismiss the ground Nos. 1 to 3 raised by the Revenue.
Ground Nos. 4 and 5 relate to the disallowance of bogus purchases of Rs 2,81,57,892/- from M/s Akansha Fashion and M/s Jindal Fashion [Prop. Shri Sanjay Jindal] by the Assessing Officer and deleted by the ld. CIT(A).
At the very outset, the ld. counsel for the assessee vehemently submitted that this issue has been decided in favour of the assessee and against Revenue in assessee’s own case by the co-ordinate bench vide order in ITA 3310/D/2019 dated 24.09.2021 wherein disallowance of job work expenses paid to M/s Akansha Fashion and M/s Jindal Fashion [Prop. Shri Sanjay Jindal] were deleted considering the same to be genuine.
Per contra, the ld. DR relied on the orders of the authorities below, however fairly conceded that the addition has been deleted by the Tribunal.
We find that the ITAT (supra) has held the expense made to M/s Akansha Fashion and M/s Jindal Fashion as genuine. Respectfully following the same, we dismiss the ground Nos. 4 to 5 raised by the Revenue Accordingly, appeal of the Revenue is dismissed.
Ground no 6 relates to disallowance of Rs.29,21,04,903/- being loss on account of fire debited to profit & loss account which was deleted by the CIT(A). Ground no 7 relates to the addition of Rs. 38,43,612/-being on account of income tax refund. The CIT(A) has deleted the above two additions following the decision of Delhi High Court in the case of Kabul Chawla 380 ITR 573(Del), holding that these additions are not based on any incriminating materials found belonging to the assessee during the search.
Per contra, the ld. DR relied on the orders of the AO.
We find that the ITAT in AY 2013-14 (supra) has given a finding that no incriminating materials were found during the search on the Assessee. We further find that the search in the case of the assessee took place on 29.04.2015 rendering the AY 2011-12 as unabated assessment year. The Supreme Court, affirming the decision of Kabul Chawla(supra), has held in PCIT vs Abhisar Buildwell (P) Ltd. (SC) reported in 454 ITR 212 that for an unabated assessment year, no addition can be made in absence of any incriminating materials. The Revenue has not controverted the assertion of the assessee that the above two additions on account of fire and on account of income tax refund, are made sans incriminating materials. In view of the above factual matrix of the instant case we, respectfully following the decision in Abhisar Buildwell (supra), dismiss the ground Nos. 6 to 7 and grounds 8 to 14 raised by the Revenue. Accordingly, appeal of the Revenue is dismissed.
A.Y 2012-13
ITA No. 3309/DEL/2019 [Assessee’s appeal]
ITA No. 5036/DEL/2019 [Revenue’s appeal]
The assessee’s appeal contains as many as 8 grounds of appeal. However, the main grievance vide Ground Nos. 3 and 4 is the addition of Rs. 5,48,51,943/- made by the Assessing Officer and confirmed by the ld. CIT(A) on account of bogus expenses claimed with respect to M/s Sai Export, Prop. Shri Mohinder Kumar Garg.
At the very outset, the ld. counsel for the assessee submitted that the ld. CIT(A) has given a finding that job work done by M/s Sai Exports Prop. Shri Mohinder Kumar Garg were not genuine. However, the job work done by M/s Sai Exports Prop. Shri Mohinder Kumar Garg was held as genuine by the ITAT in assessee’s own case in A.Ys 2013-14 and 2014-15. Further, the ITAT also held that the addition made is not based on any incriminating material found during the course of search and deleted the addition made by the Assessing Officer.
Per contra, the ld. DR fairly conceded to the submissions made by the ld. counsel for the assessee and relied on the orders of the authorities below.
Having heard the rival submissions and perusing the relevant material on record, we respectfully follow the findings of the co-ordinate bench in ITA 3310/Del/2019 in A.Y 2013-14 vide order dated 24.09.2021 related to the above issue, and hold that the expense made to M/s Sai Exports, Prop. Shri Mohinder Kumar Garg are genuine. Accordingly, the grounds raised by the assessee are allowed.
Grounds 1 & 2 and 5 & 6 relate to validity of assessment made u/s 153A and approval u/s 153D. The assessee has not pressed these grounds, hence the same are dismissed as not pressed.
Appeal of the assessee is partly allowed.
The Revenue’s grievance raised in the Revenue’s appeal vide Ground Nos. 1, 2 and 3 is the addition of Rs. 8,56,94,311/- made by the Assessing Officer on account of bogus expenses claimed with respect to job work done by M/s Palwal Enterprises and M/s Aam Bee Clothing, Prop. Mrs. Hema Sharma, Palwal Craft, Prop Mr. Harinder Sharma and Palwal Clothing, Prop Mr. Harinder Sharma. These additions were deleted by the ld. CIT(A).
Identical issue has been discussed and dealt with by us hereinabove while dealing with assessee’s appeal for A.Y 2010-11 and AY 2011-12 by relying upon the decision of the co-ordinate bench in assessee’s own case [supra]. Respectfully following the same, we order accordingly and dismiss the grounds raised by the Revenue on this count.
Similar is the fate with Ground Nos 4 to 5 with respect to the addition amounting to Rs. 5,88,51,200/- made by the Assessing Officer on account of bogus job work done by M/s Jindal Fashion [Prop. Sanjay Jindal] and M/s Akansha Fashion. These additions were deleted by the ld. CIT(A). We find that the Tribunal in A.Ys 2013-14 and 2014-15 has deleted similar addition by holding that the assessee job work done by M/s Jindal Fashion [Prop. Sanjay Jindal] and M/s Akansha Fashion were genuine. The ITAT further held that the additions were not based on any incriminating material found during search proceedings.
Respectfully following the coordinate Bench (supra), we delete the addition made by the Assessing Officer on account of payment made to M/s Jindal Fashion [Prop. Sanjay Jindal] and M/s Akansha Fashion. We order accordingly and dismiss the grounds Nos. 4 and 5 raised by the Revenue on this count.
Appeal of the Revenue is dismissed.
To sum up, in the result, the various appeals are decided as follows:
CO No. 111/DEL/2017 [A.Y 2010-11] Dismissed
ITA No. 3308/DEL/2019 [A.Y 2011-12] Partly allowed
ITA No. 3309/DEL/2019 [A.Y 2012-13] Partly allowed
ITA No. 5034/DEL/2019 [A.Y 2010-11] Dismissed
ITA No. 5035/DEL/2019 [A.Y 2011-12] Dismissed
ITA No. 5036/DEL/2019 [A.Y 2012-13] Dismissed